WASHINGTON (Reuters) – The United States has signed a $3.5 billion sale of an advanced antimissile interception system to the United Arab Emirates, part of an accelerating military buildup of its friends and allies near Iran.

The deal, signed on December 25 and announced on Friday night by the U.S. Defense Department, “is an important step in improving the region’s security through a regional missile defense architecture,” Pentagon press secretary George Little said in a statement.

The U.S. Congress had been notified of the proposed sale in September 2008 by former President George W. Bush’s administration. At that time, the system built by Lockheed Martin Corp had been projected to involve more missiles, more “fire control” units, more radar sets, all at a cost roughly twice as much to UAE.

It marks the first foreign sale of the so-called Theater High Altitude Area Defense (THAAD), the only system designed to destroy short- and intermediate-range ballistic missiles both inside and outside the Earth’s atmosphere.

The United States, under the government-to-government deal, will deliver two THAAD batteries, 96 missiles, two Raytheon Co AN/TPY-2 radars plus 30 years of spare parts, support and training with contractor logistics support to the UAE, Little said.

“Acquisition of this critical defense system will bolster the UAE’s air and missile defense capability and enhance the already robust ballistic missile defense cooperation between the United States and the UAE,” he said.

Lockheed Martin did not immediately respond to a request for its delivery timetable for THAAD, part of a layered bulwark being built by the Obama administration in Europe and the Middle East against Iran’s growing missile capabilities.

WASHINGTON (Reuters) – The United States will sell $29.4 billion in fighter jets to Saudi Arabia, in a deal the White House said would support more than 50,000 jobs and help reinforce regional security in the Gulf amid mounting tension with Iran.

The sale covers 84 new Boeing F-15 fighters with advanced radar equipment and digital electronic warfare systems plus upgrades of 70 older F-15s as well as munitions, spare parts, training, maintenance and logistics.

While the sale was previously okayed by Congress, the White House announcement comes at a moment of rising tensions in the Gulf region.

Both the United States and Saudi Arabia, which sees Iran as a significant potential threat, are worried over Iran’s nuclear program. Iranian officials this week repeated threats to close the Strait of Hormuz in response to mounting U.S. and European economic sanctions.

The sale also comes as President Barack Obama prepares to accelerate his campaign for reelection in November 2012, a campaign likely to be fought over the U.S. economy and job growth.

A White House spokesman said the Saudi arms sales would give the U.S. economy a $3.5 billion annual boost and help bolster exports and jobs.

The Obama administration cleared with Congress more than a year ago the potential sale of more than $60 billion of military hardware to Saudi Arabia over 10 to 15 years, including the F-15s, helicopters and related equipment and services.

WASHINGTON (Reuters) – North Korea likely is closer to mounting nuclear warheads on its ballistic missiles than generally reported, possibly only one or two years away, the Congress’s former top expert on the issue has concluded.

Larry Niksch, who tracked North Korea for the nonpartisan Congressional Research Service for 43 years, concludes in a new paper that the North probably would need as little as one to two years to miniaturize and mount a nuclear warhead atop its medium-range Nodong missile once it has produced enough highly enriched uranium as the warhead’s core fuel.

A North Korea armed with nuclear-tipped missiles would rattle East Asia and present new policy and military challenges to the United States and its allies.

Trying to determine when Pyongyang will reach that threshold has long been a challenge for the U.S. intelligence community. Niksch’s timeline, if correct, puts out a new marker for strategists.

Last January, then-U.S. Defense Secretary Robert Gates said the North was within five years of building an intercontinental ballistic missile that, paired with its nuclear program, would be “a direct threat” to the United States.

North Korea has staged relatively few missile tests in recent years, suggesting it is still working on perfecting the needed technologies even as it has cooperated with Iran to do so.

Its nuclear and missile capabilities are once again in the spotlight as power passes to North Korea’s designated young leader, Kim Jong-un, after the December 17 death of his father, Kim Jong-il.

WASHINGTON (Reuters) – The head of the U.S. Central Command is urging Pakistan to share a map of its facilities and installations near the Afghan border to help avert episodes like the one that killed 24 Pakistani forces last month.

U.S. Marine Corps General James Mattis, the commander, said in a statement on Monday the chief lesson from the strike was “that we must improve border coordination and this requires a foundational level of trust on both sides of the border.”

He told the allied commander in Afghanistan, General John Allen, to develop steps to prevent “friendly fire” incidents and share them with Pakistan’s military when possible.

The orders were disclosed on the Central Command’s web site along with a 30-page report of the U.S. military’s findings on the November 25-26 nighttime airstrike that deeply angered Pakistan.

The incident has derailed already uneasy Pakistan-U.S. cooperation in the American-led fight against Islamic militants who zig-zag the border, known as the Durand line, to destabilize the Afghan government of President Hamid Karzai.

After the airstrike, Pakistan closed routes used to supply U.S. forces in Afghanistan and booted the United States from an air base used to launch remotely piloted drone aircraft.

The Pentagon report outlined last week said investigators found that U.S. forces had failed to verify the location of Pakistani units before ordering the attack but blamed Pakistani forces for firing first.

WASHINGTON (Reuters) – The Obama administration cleared the way for states to legalize Internet poker and certain other online betting in a switch that may help them reap billions in tax revenue and spur web-based gambling.

A Justice Department opinion dated September and made public on Friday reversed decades of previous policy that included civil and criminal charges against operators of some of the most popular online poker sites.

Until now, the department held that online gambling in all forms was illegal under the Wire Act of 1961, which bars wagers via telecommunications that cross state lines or international borders.

The new interpretation, by the department’s Office of Legal Counsel, said the Wire Act applies only to bets on a “sporting event or contest,” not to a state’s use of the Internet to sell lottery tickets to adults within its borders or abroad.

“The United States Department of Justice has given the online gaming community a big, big present,” said I. Nelson Rose, a gaming law expert at Whittier Law School who consults for governments and the industry.

The question at issue was whether proposals by Illinois and New York to use the Internet and out-of-state transaction processors to sell lottery tickets to in-state adults violated the Wire Act.

But the department’s conclusion would eliminate “almost every federal anti-gambling law that could apply to gaming that is legal under state laws,” Rose wrote on his blog at www.gamblingandthelaw.com.

WASHINGTON (Reuters) – Even as the last F-22 fighter jet rolls out of flag-draped doors at a Lockheed Martin Corp (LMT.N: Quote, Profile, Research, Stock Buzz) assembly plant on Tuesday, the Air Force has taken steps that leave open an option to restart the premier plane’s production relatively cheaply.

The Air Force is preserving the hardware used to build the jet, not scrapping it, although it insists this is solely to sustain the fleet over its projected 30-plus years’ “lifecycle.”

The F-22 is “easily the most capable fighter aircraft ever built, period,” said Richard Aboulafia, a combat plane expert at the Teal Group aerospace consultancy.

“You don’t know what the economy and the strategic picture will look like in a decade,” he said. “And if one gets better and the other gets worse, you could see a restart.”

A lunchtime ceremony feting F-22 program employees will mark the emergence of the 187th and final production model from the Marietta, Georgia, plant, 14 years after the most advanced and most costly per-plane U.S. fighter began flight tests.

F-22 supporters maintain it was terminated prematurely.

The fleet, as conceived during the Cold War, was to have been 750. That dropped to 381, then 243, before former Defense Secretary Robert Gates capped it at 187 in a belt-tightening move over program backers’ strong objections.

WASHINGTON (Reuters) – Russia and the United States are planning a regular exchange on “technical threats” that appear to come from computers in each other’s territories, a White House spokeswoman said on Friday, even as bilateral ties have come under growing strains.

A range of mechanisms aimed at confidence building and crisis prevention are being planned to cope with alarming events in cyberspace, said Caitlin Hayden, a spokeswoman for the White House National Security Council.

These include “regular exchanges on technical threats that appear to emanate from one another’s territory” as well as “no-fail communications mechanisms to help prevent crisis escalation and build confidence,” she said in an emailed reply to a query.

Some such links have existed for years, including the Nuclear Risk Reduction Center, but others are “cyber-specific and would begin working with Moscow for the first time,” Hayden said, without giving a projected start date.

A representative of the Russian Embassy in Washington did not return a phone call seeking comment.

Vice President Joe Biden said last month the United States was working with Moscow to link computer emergency response teams and the nuclear risk reduction centers and setting up lines of communication in case of “an alarming incident.”

“It’s a great deal harder to assess another nation’s cyber-capabilities than to count their tanks,” he told the London Conference on Cyberspace on November 1 by videocast.

WASHINGTON (Reuters) – Lockheed Martin Corp (LMT.N: Quote, Profile, Research, Stock Buzz) is being awarded a $4 billion fixed-price U.S. Navy contract for 30 F-35 Joint Strike Fighter aircraft, the fifth batch of low-rate initial production, the Defense Department said on Friday.

The deal would provide 21 conventional models for the Air Force, six carrier variants for the Navy and three short-takeoff and vertical landing versions for the Marine Corps, a notice in the Pentagon’s daily contract digest said.

Details of the deal have not been worked out, said Michael Rein, a company spokesman, referring to the government announcement as an “undefinitized contract action” subject to further negotiation.

“This is welcome news for both Lockheed Martin and our many F-35 suppliers and will help ensure we continue to meet production schedules outlined by the program,” he said by email.

The Pentagon currently plans to buy more than 2,440 F-35 aircraft in three separate models for the Navy, Marine Corps and Air Force.

It is the costliest Pentagon purchase in history, at a projected cost of $382.5 billion through 2035. The F-35 has been developed with eight foreign partners to replace at least 13 types of aircraft, including Lockheed’s F-16, for 11 nations initially.

The Defense Department already has restructured the F-35 program twice in recent years. The fifth production batch fell to 30 from a previously planned 42 because more retrofits and changes have been required than had been projected.

WASHINGTON (Reuters) – Production of Lockheed Martin Corp’s (LMT.N: Quote, Profile, Research, Stock Buzz) F-35 Joint Strike Fighter, the costliest arms purchase in history, should be slowed because of the potential number of airframe cracks and “hot spots” turning up in testing and analysis, the Pentagon’s F-35 program director said.

“The analyzed hot spots that have arisen in the last 12 months or so in the program have surprised us at the amount of change and at the cost,” U.S. Navy Vice Admiral David Venlet, the program chief, said in an interview published Thursday.

“Most of them are little ones. But when you bundle them all up and package them, and look at where they are in the airplane and how hard they are to get at after you buy the jet, the cost burden of that is what sucks the wind out of your lungs,” he said.

“I believe it’s wise to sort of temper production for a while here, until we get some of these heavy years of learning under our belt and get that managed right,” Venlet added.

The Pentagon program office confirmed the vice admiral’s quotes on Friday. He spoke in an interview with AOL Defense, a web site aimed at the industry.

The Pentagon currently plans to buy more than 2,440 F-35 aircraft in three models, at a projected cost of $382.5 billion through 2035. It has been developed with eight foreign partners to replace at least 13 types of aircraft, including Lockheed’s F-16, for 11 nations initially.

The Defense Department already has restructured the F-35 program twice in recent years, with the next production batch due to fall to 30 from a previously planned 42. Venlet did not say how much more he favored slowing output.

By Jim Wolf

(Reuters) – General Electric Co and Rolls Royce dropped their drive to build an alternate engine for Lockheed Martin Corp’s F-35 joint strike fighter, giving up on what they had said could be a $100 billion market.

The decision to end their in-house bankrolling of the project beyond 2011, announced on Friday, is a boost for United Technologies Corp’s Pratt & Whitney unit, maker of the engine used in the F-35′s early production models.

The Defense Department earlier this year canceled funding for the GE-Rolls engine, capping repeated efforts to persuade Congress to kill it as a belt-tightening measure.

That led the partners to say they would foot the bill themselves for the rest of this year and fiscal 2012 in the hope that lawmakers would step back in with federal funding as they had done for years in rebuffing the Pentagon.

“The decision, reached jointly by GE and Rolls-Royce leadership, recognizes the continued uncertainty in the development and production schedules for the JSF program,” the companies said.

The Joint Strike Fighter project is the Pentagon’s costliest purchase ever at a projected $382.5 billion for more than 2,400 aircraft in three models over the next two decades.